As revised at the September 23, 2013 Board of Directors Meeting

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Maximillian Patrick
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1 As revised at the September 23, 2013 Board of Directors Meeting PURPOSE The Audit and Finance Committee ( AFC ) is appointed by the Board of Directors (the Board ) to assist the Board (1) in fulfilling its audit oversight responsibilities and (2) in the review and approval of corporate financial policy and strategy. Although it is not the function of the AFC to act as an auditor, in its audit role the AFC shall be responsible for the oversight of the financial reporting process. In its audit oversight role, the AFC shall have the following primary duties and responsibilities: To review the integrity of the Corporation s financial statements, financial reporting process and systems of internal controls regarding finance and accounting; To assist the Board in its oversight of the Corporation s compliance with legal and regulatory requirements that relate principally to financial matters; To review the independence, qualifications and performance of the Corporation s independent auditor and internal auditing department; To provide an avenue of communication among the independent auditor, management, the internal auditing department, and the Board; and To prepare the report that the Securities and Exchange Commission (the SEC ) rules require to be included in the Corporation s annual proxy statement. In its role overseeing financial policy and strategy, the AFC shall be responsible for the review and oversight of the following areas: Capital Structure; Financial Operations; Banking; Employee Benefit Plan Assets and Investment Strategy; and Financial Organization. The AFC shall have the authority to conduct any investigation appropriate to fulfilling its responsibilities and it shall have direct access to the independent auditor as well as to anyone in the Corporation. In fulfilling its audit oversight responsibilities, the AFC shall have the ability to retain, at the Corporation s expense, special legal, accounting, or other consultants or experts it deems necessary in the performance of its duties. AFC Page 1

2 COMPOSITION AND MEETINGS The AFC shall be composed of three or more directors as determined by the Board, each of whom shall be independent nonemployee directors, free from any relationship that would interfere with the exercise of his or her independent judgment, and as required by the independence requirements of the New York Stock Exchange and Securities Exchange Act of 1934 (the Exchange Act ) Rule 10-A3(b)(1). All members of the AFC shall have a basic understanding of finance and accounting and be able to read and understand fundamental financial statements within a reasonable period of time after his or her appointment to the AFC, and at least one member of the AFC shall have accounting or related financial management expertise as determined by the Board in its business judgment. In addition, either at least one member of the AFC shall be an audit committee financial expert within the definition adopted by the SEC or the Corporation shall disclose in its periodic reports required pursuant to the Exchange Act the reasons why at least one member of the AFC is not an audit committee financial expert. No AFC member may simultaneously serve on the audit committee of more than three public companies, unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the AFC and such determination is disclosed in the Corporation s annual proxy statement. AFC members shall be appointed by the Board, which shall also elect one AFC member as Chairman of the AFC. AFC members may be removed from the AFC, with or without cause, by the Board. The AFC shall meet at least four times annually, or more frequently as circumstances dictate. An agenda shall be circulated in advance of each meeting. The AFC should meet regularly and privately in executive session and separately with management, the director of the internal audit department, the independent auditor and as a committee to discuss any matters that the AFC or any of these groups believe should be discussed. In addition, the Chairman of the AFC should communicate with management and the independent auditor quarterly to review the Corporation s financial statements and significant findings based upon the auditor s limited review procedures. All non-management directors that are not members of the AFC may attend and observe meetings of the AFC, but shall not participate in any discussion or deliberation unless invited to do so by the AFC, and in any event shall not be entitled to vote. The AFC may, at its discretion, include in its meetings members of the Corporation s management, representatives of the independent auditor, the internal auditor, any other financial personnel employed or retained by the Corporation or any other persons whose presence the AFC believes to be necessary or appropriate. Notwithstanding the foregoing, the AFC may also exclude from its meetings any persons it deems appropriate, including, but not limited to, any non-management director that is not a member of the AFC. AFC Page 2

3 RESPONSIBILITIES AND DUTIES A. Audit Oversight. In its audit oversight role, the AFC shall have the following responsibilities and duties: Review Procedures 1. Review and reassess the adequacy of this Charter at least annually. Submit any changes to the Charter to the Board for approval and have the document published at least every three years in accordance with SEC regulations. 2. Perform an evaluation of the AFC and its members, including an evaluation of the AFC s compliance with this Charter. 3. In consultation with management, the independent auditor and the internal auditors, consider the integrity of the Corporation s financial reporting processes and controls. Discuss significant financial risk exposures and the steps management has taken to monitor, control and report such exposures. Review significant findings prepared by the independent auditor and the internal auditing department, together with management s responses thereto. 4. Review and discuss the annual audited financial statements and quarterly financial statements with management and the independent auditor, including the Corporation s disclosures under Management s Discussion and Analysis of Financial Condition and Results of Operations. Review should include discussion with management and the independent auditor of significant issues regarding accounting principles, practices and judgments. Discuss any significant changes to the Corporation s accounting principles and any items required to be communicated by the independent auditor in accordance with SAS 61. The Chairman of the AFC may represent the entire AFC for purposes of this review. It is management s responsibility to prepare financial statements in accordance with GAAP and to ensure that financial statements filed with the SEC fairly and accurately represent the financial condition of the Corporation. Furthermore, management is charged with fully briefing the AFC on significant issues regarding accounting principles, practices and judgments. 5. Review and discuss with management and the independent auditor: (a) any material arrangements or transactions that are not reflected on the Corporation s financial statements and (b) any material related party transactions involving terms that differ from those that would typically be negotiated with independent parties. 6. On a yearly basis, the AFC shall review the process by which the CEO and CFO engage in a due diligence for and execute the quarterly financial statement certifications required by the Sarbanes Oxley Act. Independent Auditor 7. Exercise oversight of the independent auditor. Exercise sole authority and responsibility for the appointment and termination of the independent auditor and to annually reconfirm its appointment. Review the independence and performance of the independent auditor. The AFC should present its conclusions with respect to the independence of the AFC Page 3

4 Corporation s independent auditor to the full Board. ultimately accountable to the AFC and the Board. The independent auditor is 8. Approve the fees and other significant compensation to be paid to the independent auditor (subject, if applicable, to stockholder ratification). The AFC is directly responsible for the oversight of the independent auditor and has sole authority and responsibility for their appointment, termination and compensation (subject, if applicable, to stockholder ratification). The independent auditor will report directly to the AFC and the AFC will be responsible for the resolution of any disagreements between management and the independent auditor regarding financial reporting. The AFC shall approve all audit fees and terms and all non-audit services provided by the independent auditor, and shall consider whether these services are compatible with the auditor's independence. The AFC may develop a streamlined process for approving non-audit and audit services between AFC meetings. In connection with the annual proxy statement, the AFC will consider and report whether the provision of non-audit services is compatible with the auditor's independence. In evaluating non-audit services, the AFC will weigh such factors as the benefits provided by the auditor's familiarity with the Corporation, its controls, processes, tax position, and overall business strategy, and the extent to which the services may provide insight to the accounting firm in performing the audit of the Corporation. The AFC will establish policies and procedures for the engagement of the independent auditor to provide non-audit services. 9. The AFC shall, at least annually, obtain and review a report by the independent auditors describing: (a) the outside auditors internal quality control procedures and (b) any material issues raised by the most recent internal quality-control review or peer review of the outside auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the outside auditors, and any steps taken to deal with any such issues. 10. On an annual basis, review and discuss with the independent auditor all significant relationships it has with the Corporation. 11. Review the independent auditor s audit plan. Discuss scope, staffing, locations, reliance upon management and internal audit and general audit approach. 12. Consider the independent auditor s judgments about the quality and appropriateness of the Corporation s accounting principles as applied in its financial reporting, including any audit problems or difficulties and management s response. 13. Discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. 14. Set clear hiring policies for employees or former employees of the Corporation s independent auditor. 15. Review the Corporation s compliance with the Corporation s hiring policy for employees or former employees of the Corporation s independent registered public accounting firm. AFC Page 4

5 16. At least every third year, evaluate whether to request proposals for engagement from between two and five independent audit firms, other than the independent audit firm then serving as the Corporation s independent auditor. If the AFC deems appropriate, the AFC shall solicit input from the Corporation s Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Controller, and any other appropriate individuals (collectively, the Evaluation Officers ) as part of this evaluation process. Such evaluation shall consider switchover costs, the quality of service being provided by the current independent auditor, the reasonableness of the current independent auditor s cost, the Corporation s ability to access the necessary expertise within the current independent auditor and the independence of the current independent auditor as well as, if received, the input provided by the Evaluation Officers. Internal Audit Department 17. Review the budget, plan, changes in plan, activities, organizational structure, and qualifications of the internal audit department, as needed. 18. Review the appointment, performance and when necessary replacement of the senior internal audit executive. 19. Review significant reports prepared by the internal audit department, together with management s response and follow-up to these reports. 20. Periodically review with the Corporation s counsel any legal matters that could have a significant impact on the Corporation s financial statements. Other AFC Audit Oversight Responsibilities 21. Annually prepare a report to stockholders as required by the SEC. The report should be included in the Corporation s annual proxy statement. 22. Perform any other activities consistent with this Charter, the Corporation s Bylaws and governing law, as the AFC or the Board deems necessary or appropriate. 23. Maintain minutes of meetings and regularly report to the Board on significant results of the foregoing activities. 24. The AFC shall establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters. The AFC shall also establish procedures for the confidential and anonymous submission by employees regarding questionable accounting or auditing matters. 25. Periodically review audit results associated with directors and officers expense accounts and perquisites. Annually review a summary of directors and officers related party transactions and potential conflicts of interest. AFC Page 5

6 26 Annually evaluate the AFC s performance in fulfilling its duties and responsibilities under this Charter, and review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval. B. Finance Oversight. In its finance oversight role, the AFC shall have the following responsibilities and duties: Capital Structure 1. Review and recommend to the Board approval of the capital structure and the financing plan for the year including approval of short-term and long-term debt programs. 2. Review dividend strategy. 3. Review financing strategies for transactions in excess of $20 million. 4. Review interest rate and currency exposure management and hedging strategies and monitor performance. 5. Review and evaluate financial management strategies designed to enhance stockholder value. 6. Review cash flow forecasts on a periodic basis. 7. Review strategy for investment of corporate funds and monitor performance. 8. Review balance sheet performance. 9. Review recommendations regarding stock splits and treasury share purchases. 10. Review periodically the geographical source of the Corporation's earning power and the location of the Corporation's principal assets. 11. As necessary, review current developments in accounting. 12. Periodically review IT systems and security to ensure accurate and timely financial reporting, forecasting and planning. Financial Operations 13. Review long-term tax strategy, the annual tax rate calculation and the repatriation of Corporation earnings. Monitor effects of U.S. and international tax regulations. 14. Review risk assessment and risk management, including enterprise risk management and insurance programs. Banking 15. Review the major commercial banking, financial consulting and other financial relations of the Corporation to assure adequacy of coverage. AFC Page 6

7 16. Review on an annual basis with the Finance Department the fees paid to the Corporation s bankers and banking advisors. Employee Benefit Plans 17. Review the performance of the ECOM Global Investment and Benefits Subcommittee with respect to plan actuarial assumptions, accounting determinations, funding levels, asset investment and allocation strategies, manager and trustee selection and overall operations. Financial Organization 18. Review and evaluate the Corporation's financial organization, staffing thereof, and succession planning. AFC Page 7

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF MINERALS TECHNOLOGIES INC.

CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF MINERALS TECHNOLOGIES INC. I. PURPOSE The primary purposes of the Audit Committee (the Committee ) are to: 1. Assist the Board of Directors (the Board ) in its oversight of (i) the integrity of the Company s financial statements,